It seems like it:
Back in the banking crisis of 1907, J.P. Morgan got all the major
bankers into one room and forced a kind of reorganization on all of
them. We need the same today -- a giant reorganization of the banks, in
which their shareholders lose what little value they have left, their
creditors get paid 20 cents or so on the dollar, and their assets are
written down to about 20 percent of their face value. In effect, it's
an industry-wide reorganization under bankruptcy. This way, bank
balance sheets are cleared up, there's no run on any one bank, everyone
starts anew, and taxpayers aren't left holding the bag.
To the extent Geitner is serious about preserving a truly private financial system, this kind of broad-based reorganization of the entire sector in the shadow of bankrutpcy, seems to me to be the best alternative at this point.
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